5 practical steps for women who want to take control of their finances
Alright, alright, you’re sick of hearing it: women aren’t as engaged with their personal finances as men, surveys show that on average, women’s financial literacy is lower than men’s and the gender pay gap starts as early as six years old.
You’ve heard it all before. But before you completely switch off, there’s a reason this has become a common refrain: because it’s really, really important.
Improving your financial understanding is an important step towards financial independence, and being confident managing your own money. And that can have far ranging effects - financial security means you can leave that dead end job or relationship and know you’ll be ok, now and in the future.
So no matter how precarious your relationship with your bank balance is, this checklist of 5 simple steps is designed to help you make better, more informed personal finance choices.
1. Check your credit score
With comprehensive credit reporting kicking in this July, understanding how your credit history is recorded and what it means for your finances is more important than ever. Yet, according to CreditSmart, 65% of Aussie women have never checked their credit report - and a quarter don’t even know what a credit score is. If you’re included in that number, then right now is the perfect time to brush up on your credit report knowledge.
Every year, you can get a free copy of your credit report from the main three credit reporting bodies, Experian, Illion, and Equifax. It’s a good idea to get into the habit of reviewing your credit report regularly, fixing any mistakes it may contain and keeping track of your credit score health.
2. Build up a savings buffer
In a recent Mozo survey, 1 in 3 people admitted that they couldn’t come up with $500 in an emergency. If that’s you, then it’s time to start building your savings, in case you get hit with an unexpected bill, need to take a last minute flight, or suddenly lose your job.
Mozo crunched the numbers and found that to save up a rainy day fund that will cover you for 3 months living expenses, Aussies need an average of $9,063.91, which will take an average 8.7 months to save up. So it’s a good idea to get started right away! One good place to start is to get a high interest savings account, and then set up automatic transfers into it for each time you get paid.
3. Get your super in shape
According to Women in Super, women retire with 47% less super than men. They give a bunch of reasons why this happens, including that women are more likely to take time out of the workforce to raise children or care for aging family members, women working full-time earn an average 18% less than men and that 43% of women only work part-time.
And all this means that as many as 40% of older single retired women live in poverty. You don’t want to be one of them, so it’s time to review your super fund and work out if your nest egg is really in the right place. It also pays to put some time into tracking down any super from old jobs, which you can easily do through the ATO website.
4. Protect yourself with insurance
Life insurance, home insurance, income protection insurance, car insurance - it can be hard to know what cover you need and when, so sometimes, it’s easier just to ignore this part of your finances all together. But the right insurance cover plays a key part in your financial security, and your ability to bounce back after things go wrong.
One insurance policy that often gets ignored is life insurance. The right time to get insurance is before you need it - so as soon as you have financial responsibilities like a loan, or dependents, that’s the perfect time to start shopping for a life insurance policy.
5. Familiarise yourself with different financial products
According to a CommBank report from 2017, 56% of women under 24 are confused by all the financial products and services available. Sound familiar?
Even if the fine print of a credit card or the difference between one personal loan and the next is enough to send you to sleep, getting familiar with different products and how they work means you’ll be able to make more confident decisions about your money and how to use it - not to mention you’ll also be able to shop around and get the best deal.
That’s where Mozo comes in. We’ve written a tonne of guides, collected all the best tips and answered every common questions we could think of, to help you better understand financial products and how they can work for you. Plus, our comparison tables lay information out in an easy to understand way, to help you work out which product to pick when you decide to add a new credit card, a personal loan or even a home loan to your life.
What financial product are you looking for information on? Head to our banking hub to get started.